Merger profitability in industries with brand portfolios and loyal customers

Kai Konrad

Discussion Papers, Research Professorship & Project "The Future of Fiscal Federalism" from WZB Berlin Social Science Center

Abstract: We study the equilibrium effects of mergers between firms with brand portfolios and brand loyal customers for pricing and profitability. We find that the merger paradox (Salant, Switzer and Reynolds 1983) is absent in these markets. The acquisition of brand portfolios can be profit enhancing for the merging firms and payoff neutral for the firms not involved in the merger. This may explain the emergence of brand conglomerates such as Richemont, PPR or LVMH.

Keywords: Brand portfolios; merger profitability; customer loyalty (search for similar items in EconPapers)
JEL-codes: D43 L22 M31 (search for similar items in EconPapers)
Date: 2010
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Related works:
Journal Article: Merger Profitability in Industries with Brand Portfolios and Loyal Customers (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:wzbfff:spii201008

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